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Client Alert: Immediate Enforcement of Capital Requirements for Foreign-invested Trading Companies

Client Alert: Immediate Enforcement of Capital Requirements for Foreign-invested Trading Companies

July 9, 2019

On 25 June 2019, The Ministry of Industry and Commerce issued Notice No. 0764/ERMD.IC (the “Notice”) instructing its provincial and Vientiane Capital divisions to inspect the company registration of foreign-invested wholesale and retail trading companies.

The intention of the Notice is to ensure that all foreign-invested trading companies (both wholesale and retail) are in compliance with the minimum capital requirements specified in Instruction No. 1005/IC.DC dated 22 May 2015, as follows:

  • Trading companies that are 100% foreign-owned must have registered capital of at least LAK20 billion or US$2.3 million.
  • Joint venture trading companies with a foreign/local ownership of 70:30 requires minimum capital of at least LAK10 billion or US$1.15 million; joint ventures with a foreign/local ownership of 50:50 requires minimum capital of at least LAK4 billion or US$460,000.

Per the Notice, any foreign-invested trading company (either joint venture or 100% foreign-owned) that fails to meet the above requirements will be terminated, and its enterprise registration certificate revoked immediately.

Our reading of the Notice is that inspections will begin right away, although it does not mention a start date. Therefore, we strongly suggest that all trading companies review their corporate registration information and rectify any issues without delay.

If you have questions on this alert, or need help with this review, please contact the undersigned or your usual VDB Loi adviser.

AUTHOR

Daodeuane is regarded as one of Laos’s most experienced and knowledgeable tax advisers. She has over 20 years of experience, including leading the tax team at PwC in Laos, and prior to that, working at a top regional law firm.

Daodeuane has provided tax and legal advisory services to a large number of multinational and local firms in Laos across a wide range of sectors, including mining, hydropower, gas exploration and banking, and has formed excellent working relationships with the government authorities in Laos – in particular with the Tax Department.

With a Bachelor’s in Education from the National University of Laos and a Diploma in Business Administration and Accounting, Daodeuane leads our very experienced tax team and has extensive knowledge with regard to tax and legal advice, tax compliance, tax planning and structuring, tax and legal due diligence, acquisitions and mergers, and corporate and investment advisory.


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